Winnipeg police HQ contractor modified invoices to pay for 'personal home improvement': city

The City of Winnipeg says the contractor in charge of building the Winnipeg Police Service headquarters used the project to settle outstanding debts with subtrades for money owed on other construction projects, new court filings reveal.

They also say lead contractor Caspian Construction modified invoices to pay for "personal home improvement projects."

"We see instances of subtrades being paid by [Caspian] for supposed work many months, and indeed sometimes years, after the work was completed (if ever the work was completed) and after subtrade invoices have been issued to the city," City of Winnipeg lawyers Michael Finlayson and Gabrielle Lisi wrote in a brief filed in the Manitoba Court of Queen's Bench on June 13.

The city launched a civil lawsuit against dozens of people and companies involved in the police HQ construction project, including lead contractor Caspian and its owner, Armik Babakhanians, in January 2020.

The city alleges a scheme to inflate and overcharge the city for construction costs through fraudulent quotes and invoices, altered quotes from subcontractors and kickbacks.

The project was completed in 2016, years behind schedule and more than $79 million over budget. The RCMP launched a criminal investigation into the project in 2014, which was closed in late 2019 with no charges laid.

The city's latest court filing says it found many irregularities in invoicing and payment of subtrades involved in the police headquarters project by a group referred to as the Caspian defendants.

That group includes Caspian Construction, Caspian Projects Inc., and connected companies Mountain Construction, Jags Development, Brooke Holdings Ltd., Logistic Holding Inc. and Jaw Enterprises Inc. 

It also includes Armik Babakhanians, his wife, Jenik, his son Shaun, and office manager Pam Anderson.

"They paid for residential projects and their own personal home improvement projects performed by subtrades by modifying invoices to make them look project-related," wrote Finlayson and Lisi.

The city doesn't specify which home renovations it's referring to.

However, in 2014 search warrant documents, RCMP alleged a former accounting assistant employed by Caspian told police invoices were charged to the police HQ project that had nothing to do with the work being done. That included a $25,000 cheque for a swimming pool at a house that belonged to Shaun Babakhanians, RCMP alleged.

The Mounties also said that invoices for renovations to a ​private home owned ​by one of the members of the Babakhanians family were charged to police headquarters. 

"Caspian at times called the companies back … [to] have them adjust or reissue the invoices" so it would show the police headquarters job code, the former accounting assistant told investigators. She also said Caspian asked contractors to "delete the house address," the 2014 search warrant documents said.